Geox has suffered a 30.0 percent decline in like-for-like sales in the fourth quarter to date - bringing the like-for-like sales decline in the year so far to 32.0 percent - amid new temporary store closures due to a second wave of the Covid-19 pandemic in its main markets. Comparable sales had continuously improved from the April though, even turning positive in August, before starting to slide again in September.
In October, comparable sales dropped by 18 percent, and the decline accelerated to reach 52 percent in the opening weeks of November. The final rate of decrease in sales in the last quarter of the year will depend on the pandemic and government lockdown measures.
As of Nov. 12, a total of 146 directly owned stores (DOS), or 35 percent of the company’s fleet, were temporarily closed for new lockdown measures, along with 92 franchised stores, or 28 percent of the total. The figure rises to 47 percent of all DOS stores and 41 percent of franchised stores on the weekend after the Italian government imposed the closure of stores located in shopping centers every weekend until Dec. 3. All together, a total of 238 stores, or 27 percent of the total, are currently closed all week, rising to 38 percent of sites on the weekend.
While store closures are seen cutting into its topline, Geox confirmed expectations for a “good recovery” for the full year in terms of its gross margin, which fell to 41.0 percent in the first half from 50.9 percent in the year earlier.
Online sales have also continued to be strong more than midway through the fourth quarter, rising 43 percent in the year to date after a 40 percent gain in the first nine months, which in turn reflected a 21 percent increase in the first quarter, a 59 percent rise in the second and a 37 percent increase in the third. As restrictive measures began to be reintroduced in October, Geox recorded an 84 percent year-on-year rise in e-commerce compared to the year earlier.
Geox intends to keep investing in its online sales channel as it aims to become a true omnichannel player, while it is rationalizing its physical store presence in more mature markets and expanding in countries where its presence is still limited but developing well. In the fourth quarter, Geox intends to close about 10 DOS and 10 franchising stores each, bringing the total down to around 870. In the first nine months, 20 new Geox shops were opened and 103 closed. In the third quarter alone, there were 45 net closures, of which 30 were DOS.
In the third quarter, overall sales fell by a reported 23.7 percent, or 23.4 percent at constant exchange rates, to €186 million, showing an improvement on the first half, when both reported and constant-currency sales declined by 39.0 percent. Sales in DOS were positive in August and the first two weeks of September, benefiting from back-to-school and back-to-work buying, before turning negative again in the second half of September amid a resurgence in Covid-19 cases in the company’s major markets.
Geox sales in the first nine months of the year totaled €428.8 million, down a reported 33.2 percent and 33.1 percent lower at constant rates compared to the year earlier. In the first nine months, footwear sales amounted to €385.6 million, or 89.7 percent of the total, down a reported 33.5 percent or 33.6 percent lower at constant exchange rates. Apparel sales amounted to €44.2 million, down 29.7 percent both in reported and constant currency terms.
By sales channel, wholesale sales in the third quarter fell by 23.1 percent, or 22.5 percent at constant exchange rates, to €100.0 million, broadly in line with the 21 percent reduction in purchases for the fall/winter collection after orders were reviewed with clients in order to minimize the risk of cancellations. Sales generated by DOS declined by a reported 16.5 percent, or 16.2 percent at constant rates, to €70.4 million. Franchising sales amounted to about €15.7 million down by a reported 47.0 percent or 47.4 percent lower at constant rates, due in part to a 14% reduction in the Geox franchising network perimeter and a negative timing impact concerning deliveries of FW20 collection items.
In geographical terms, third-quarter sales in Italy declined by 37.6 percent to €42 million while sales in other European markets were down by 9.3 percent, or 9.4 percent at constant rates, to €92 million. Sales in North America fell by 45.9 percent, or 45.3 percent at constant rates, to €7 million.
Sales generated in the APAC region in the quarter amounted to €7.4 million, down by a reported 50.8 percent on the year earlier, due largely to a reduction in initial order collection for the wholesale channel. Like-for-like sales in the quarter were down by 27 percent in the region, with a 11 percent decline in China and the direct e-commerce channel growing by 18 percent.
Third-quarter sales in Eastern Europe stood at €37.8 million, down a reported 20.2 percent from the year earlier, with like-for-like sales declining 3 percent and e-commerce sales increasing by 58 percent.